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In April 2014 France introduced the so-called “Florange Law”. This obliged companies with more than 1,000 employees in France (or across Europe) to make “best efforts” to seek a buyer before closing an establishment and making large scale redundancies.

On 30 October 2015 the French Government issued a Decree to address certain questions which remained unanswered over the new obligations, in particular what amounts to the “closure of an establishment” for these purposes.

According to the Decree, an establishment is any economic entity which is subject to the requirement to establish a works council. This means that any companies with at least 50 employees and those which have set up works councils will be affected, as well as those which have attempted to set up a works council but had no candidates.

In terms of what amounts to a closure for these purposes, this will cover any situation where an employer is obliged to establish a jobs-saving plan (“plan de sauvegarde de l’emploi”) because of the proposed dismissals of at least 10 employees over a 30-day period as a result of one of the following: (i) the complete cessation of the business at a particular establishment; (ii) the merger of several establishments into another location; or (iii) the total transfer of an activity to another site.

A failure to comply with the requirement to seek a buyer and inform/consult the works council could result in various sanctions for companies, such as the jobs-saving plan not being approved and the Government seeking to recover all public aid previously provided to the company.

Although this Decree creates and reinforces some very strenuous obligations for employers, it is also very useful as it gives some clarity on the notions of establishment and site closure.

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